Australian bushfire peak property losses estimated at A$1.56bn - PERILS
PERILS, the independent Zurich-based organisation providing industry-wide catastrophe insurance data, has estimated the property insurance market loss for the Australian bushfires at A$1.56 billion ($1.05 billion). This is the first bushfire loss event to be reported by PERILS in Australia.
The estimate covers the peak industry event loss for seven consecutive days caused by the bushfires in Australia that occurred at the end of 2019 and beginning of 2020. The event definition follows the 168 hours clause which is predominantly used in the Australian re/insurance market to define a bushfire "event". The peak seven-day loss period differs among insurers but generally lies between 20 Dec 2019 and 6 January 2020. For the majority of insurers, it is between 30 Dec 2019 and 5 January 2020.
In line with the PERILS event definition, the loss number of A$1.56 billion covers the property line of business only. An updated estimate of the market loss from the Australian bushfires will be made available on April 5 2020, three months after the event’s end date.
The Australian 2019/2020 bushfire season is the worst on record, driven by a combination of record high temperatures, record low rainfall, extremely dry bushland and strong winds. During the peak loss period, there were devastating fires across the states of New South Wales (NSW), Victoria and South Australia, which caused at least 34 fatalities.
There have been major property losses in rural towns with approximately 10 million hectares of burnt bushland since September across the affected states. This is an area similar in size to England (13 million hectares) and over 16 times the size of the 2018 California bushfires.
Losses to the insurance industry are the highest ever for bushfires with a national aggregate total for the season so far of A$1.9 billion. Losses for the peak loss period of seven consecutive days occurred primarily in the states of New South Wales, Victoria and South Australia. To put these losses into context, they surpass the industry losses sustained in the Black Saturday Bushfires of February 2009 (A$1.07 billion original industry loss), and the Canberra Bushfire of January 2003 (A$350 million original industry loss).
Darryl Pidcock, head of PERILS Asia-Pacific, commented: “The bushfire season has had a devastating impact on many local communities, which may take years to recover. Our sincere sympathies go out to those who have also lost loved ones, including the firefighters who have made considerable sacrifices. While the quantum of insurance losses will cover only a portion of the overall economic cost of the disaster, it still plays a very important function in enabling individuals, businesses and communities to rebuild. PERILS’ mission by making available insurance industry loss information from this event is to help improve the understanding of bushfire insurance risk going forward and to facilitate the availability of capacity for future bushfire events.”